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Dynamic leveling adjusts the beam up and down depending on the attitude of the bike. If you load down the rear and raise the front, the beam would normally be aimed too high and blind oncoming drivers. Dynamic leveling adjusts for this and is required by federal motor vehicle safety standards. BMW isn't doing anything extra here.

Adaptive lighting slews the beam left or right in a turn so the beam is actually looking into the turn. I believe the BMW system uses mirrors (but no smoke).

Correct -- the HID bulb is fixed (actually facing upwards) and there is a ~2x2 movable mirror above the bulb set at roughly a 45 degree angle to reflect the light forward.

IIRC, on base models, the mirror pivots up/down to compensate for suspension height changes, while on the adaptive headlight models the mirror also gains motion about at least two axes to permit it to reflect light to the side and upward enough to stay on the road in response to the bike's attitude determining electronics.

It appears that the "Safety Package" contains both the adaptive headlight (leveling and pointing into the turns) as well as the dynamic traction control. Both systems are fed by the gyroscopic lean angle sensors so it would make sense to offer these options bundled together. Dynamic leveling is included in the base packages - perhaps the sensor for the leveling function is separate.
Curious why customers have to pay extra for the safety package. Anything safety related should never be optional, IMHO.